GE2250 Understand Global Project for Business and ...2250+Lecture+2+2015... · GE2250 Understand Global Project for Business and Engineering Professionals ... Pros: • Cost competition

GE2250 Understand Global Project for Business and Engineering Professionals

Instructor: Jiayu Chen Ph.D.

Cross-culture Collaboration

© Jiayu Chen, Ph.D. 2

INTRODUCTION

Why we need to learn Cross-culture Collaboration?

It is a big deal both in THEORY and PRACTICE!

– GLOBAL PROJECT PERFORMANCE

About 40% of Global Projects show Poor Performance and Increased Cultural

Diversity plays a pivotal role impacting performance

– GLOBALLY DISTRIBUTED PROJECT PERFORMANCE

For example, the cost basis of offshore design firms is ~20% of U.S. design

firms, yet U.S. design firms offshoring design work report savings of only ~ 20%


INTRODUCTION

The World’s BankBy HSBC

https://www.youtube.com/watch?v=GOHvMz7dl2A

https://www.youtube.com/watch?v=GOHvMz7dl2A


INTRODUCTION

What is a international project?

Project that involves individuals, teams and organizations from diverse cultural

contexts irrespective of size.

Example: Delhi Metro Project

Client: Indian Rail Co., World’s Largest Bureaucracy

Consultants: Indian, American, Japanese

Contractors: Indian, German, Japanese, Korean,

Swedish

Designers: British

Subcontractors: Indian

*Adapted from Mahalingam, Institutional Costs on Global Projects, 2006


Project that involves individuals, teams and organizations from diverse cultural

contexts irrespective of size (SAME AS GLOBAL PROJECT!)

Example: Coffeyville Refinery Project

INTRODUCTION

Design Team:

American design team in America

Romanian design team in Romania(concurrent work, two organizations)

What is a Globally Distributed Project?


INTRODUCTION

PhD“... in America, we would take this pipe,

support it upwards and hang it down, then we

would wrap the pipe, we would want it to come

down and go into the pipe rack. We have too

much downward thermal pressure. Then we

would go down and we would wrap the pipe

around and then come to the pipe rack. So we

will make an expansion loop down here (in the

horizontal portion). The service provider, what

they do is they come out and they make an

expansion loop and then they come down and

make another expansion loop and they have

got these expansion loops that come down the

pipe...and nobody here does that way. If you

put that expansion loop out there, now you

subject it to wind loads.”


• Communication

– 8hr time difference / language / highly complex design project

• Cultural Barriers

– Significant power distance between PM and engineer in Romania and between

Romanians and US team “The answer is always yes, they never ask a question”

• Trust Development

– Kick-off meetings provide trust-building platform “you have to trust them, what they are

doing, what they say they are doing”

• Quality Control

– Quality checks are done at both ends and rework is increased “frequently it will be

reworked at least twice”

• Design Practice Norms

– Most rework issues associated with differences in design norms rather than issues

following building codes/specifications

INTRODUCTION


INTRODUCTION

Why do you think Quality Control and Trust Development perspectives

vary across client and service provider?


• Needs vary across onshore and offshore teams… this must be carefully

managed:

– Trust-building exercises should be employed to engage engineers from a more

trust/relationship-based culture.

– Routines of quality control need to be carefully explained to engineers from

cultures less focused on explicit exchanges of knowledge.

• Processes need to be created to control against potentially unsafe or

inefficient design alternatives to local construction, operations,

maintenance context

INTRODUCTION


VARIETIES OF CAPITALISM



• Firms must develop relationships to solve

coordination problems…

– Industrial Relations

– Vocational Training and Education

– Corporate Governance

– Inter-firm Relations

– Employees

• National market economies can be compared by

how they resolve coordination problems

*Adapted from Hall and Soskice, Varieties of Capitalism 2001



Type 1: Liberal Market Economy Coordination

– Hierarchy

– Competitive Market Arrangements

– … “arm’s-length” exchange of goods/services

Type 2: Coordinated Market Economy Coordination

– Relational Contracting

– Exchange of Private Information within Networks

– … greater reliance on collaborative relationships

• Firms in a country gravitate toward the mode of coordination where

there is institutional support



Coordinated Market (D) Liberal Market (USA)

Industrial Relations

Production strategy relies on

highly skilled, autonomous labor

force.

Firms under no obligation to

establish representative bodies.

Vocational Training

& Education

Firms rely on apprentice system

to develop specialized skills.

Firms rely on education

institutions to provide general

skills.

Corporate

Governance

Access to capital not entirely

dependent on publicly available

financial data

Encouraged attentiveness to

current earnings and share

price in equity markets.

Inter-firm RelationsStrong partnership relationships

to affect technology transfer.

Standard market relationships

and formal contracts.

EmployeesTop managers rarely have

capacity for unilateral action.

Top managers have unilateral

freedom (e.g., hiring & firing).



Coordinated Market (D)Liberal Market (USA)





Coordinated Market (D)Liberal Market (USA)

*Radical innovation vs. Incremental innovation

Pros:

• Cost competition

• Infrastructure for radical innovation

Cons:

• Special Skills

• Incremental Innovation

Pros:

• Higher levels of specific skills

• Wage moderation

• Long-term capital

Cons:

• Inability of market share

increment and cost reduction

• Difficult for radical innovation



Strategies differ systematically across nations

– Institutional structure is a function of liberal vs. coordinated market economy

– Institutional structure conditions strategy

Investment in assets

– Coordinated Market Economies invest in specific and co-specific assets

(okay for SYSTEMIC INNOVATION)

– Liberal Market Economies invest in switchable assets (okay for LOCALIZED

INNOVATION)


Cross-Cultural CollaborationCase study


Case Study – Almond Chemical

Almond Chemical is a century-old Germanycompany. It boasted the world’s leadingchemical-production technology.

Since 1999, Almond Chemical establishedoperations in China. Since then Almond Chinahad set up two joint ventures with localpartners—the only way foreigners could dobusiness in chemicals in the country. Almondcontrolled 70% of the stock in one of them. Theother was a venture with Chongqing No. 2Chemical Company, in which Almond had a 51%stake and the Chinese directors were very active.



Liu Peijin, the president of Almond China, he want his colleagues

know how important the ethical business practices.

Chen Dong, the chairman of the joint venture and a Chongqing No.2

Chemical executive. His leadership position was one of the many

concessions Almond had made to lure his company into the joint

venture.

Wang Zhibao, the vice president of Almond China, he is in charge

of sales for the Chongqing Joint venture. He has a rich experience

and closed many deals in China.



The board meeting conflict 1 - operation

Almond was listed on the New York Stock

Exchange as well as the Frankfurt Stock

Exchange, meaning it was required to adhere to

the U.S. government’s Foreign Corrupt Practices

Act, which specifically forbade the bribing of

foreign government officials by U.S.-listed

companies.

gifts and commissions areacceptable in China and crucial to asuccessful deal.

The production facilities in Chongqing had been

built according to German national standards,

and all the safety equipment— helmets, shoes,

and protective clothing— had come from Europe

The Chinese partners had calledthese investments “wasteful” and“frivolous” — “luxuriousexpenditures” that the youngventure couldn’t, and shouldn’t,afford.

the factory treat MDI (methylene diphenyl

diisocyanate) waste as a dangerous substance and

processed with a special cleaning agent, in

accordance with European standards.

Chinese law didn’t mandate it.



“Wang is close to making a huge sale—30 million yuan—but the customer’spurchasing manager is insisting on a 1% commission. He says that’s what he’sbeing offered by other companies.”

The board meeting conflict 2 – commission

“Almond must be a law-abiding corporate citizen – as should every Almond

employee.”

“Commission or trips, it’s all the same thing: business bribery, we can get

orders without these tactics.”

“if we can’t do that, we should at least be able to offer the manager a trip to

Europe, a visit to Almond headquarters.”

“many foreign-owned companies reward Chinese customers for their

business. Some companies organize overseas visits, some provide

management training, some arrange golf outings. This is good business

practice in China. We need to be flexible in order to compete.”



“60% of the target order ”“Waste money”“High cost”“New Purchase on software”“Parent company is expecting growth in Chinese market”

What Should Liu Peijing do?Think after you finish this lesson


VARIETIES OF CULTURE


Cross-Cultural Collaboration

“We need a certain amount of humility and a sense of humour to discover cultures otherthan our own; a readiness to enter a room in the dark and stumble over unfamiliarfurniture until the pain in our shins reminds us where things are.”

– Fons Trompenaars

Cultural Dimension Theory

Fons Trompenaars

1953- presentDutch organizational theorist, management

consultant, and author in the field of cross-

cultural communication.

Gerard Hendrik (Geert) Hofstede

1928-presentDutch social psychologist, former IBM

employee, and Professor Emeritus at

Maastricht University in the Netherlands.

http://youtu.be/hmyfjKjcbm0

http://youtu.be/hmyfjKjcbm0


“Culture, …, is the collective programming of the mind which distinguishes the

members of one group or category of people from another. … The “mind” stands for

the head, heart and hands – that is, for thinking, feeling, and acting, with consequences

for beliefs, attitudes and skills. … Culture in this sense includes values: systems of

values are a core element of culture.”

(Hofstede, 2001)

“Our own culture is like water to a fish. It sustains us. We live and breathe through it.”

(Trompenaars, 2005)

“The term ‘culture” in American anthropology had two meanings:

• the evolved human capacity to classify and represent experiences with symbols,

and to act imaginatively and creatively; and

• the distinct ways that people, who live differently, classified and represented their

experiences, and acted creatively. ”

(Wikipedia, 2005)

Culture


Culture

what do you see depict above ?

A man is angry with a woman is teaching her a lesson

A daughter is helping her aged father walk

A man is picking the pocket of a woman

A man is courting a woman

A man is trying to talk to a woman who turns her back to him

Meeting between father and daughter where the daughter has a problem

A husband is helping his wife


Explicit

Culture

Implicit

Culture

Culture

*Adapt from Fons Trompenaars


Power Distance Index (PDI)

Degree to which less powerful members of society are distanced

from more powerful members of society

High PDI score: Society accepts an unequal distribution of power and

people understand "their place" in the system.

Low PDI score: Power is dispersed and society members view themselves

as equals.

Hofstede Culture Index

*Adapted from Hofstede, Culture and Organizations: Software of the Mind, 2005



High Power Distance societies tolerate a high level of authority in theirleaders, and their orders are often unquestioned. Symbols of this power areimportant.On the other hand, Low Power Distance societies have bosses that are muchcloser to their employees in power levels, and instructions can be debated orchallenged. Symbols of power aren't seen as relevant.


Individualism Index (IDV)

Degree to which individuals operate for their own interests versus

the collective interests of the group

High IDV score: Ties between individuals are loose and individuals are

expected to look after themselves.

Low IDV score: Societies are integrated into strong, cohesive in-groups

with strong loyalty.





Masculinity Index (MAS)

Masculine cultures value competitiveness and accumulation of

wealth while Feminine cultures value relationships and quality of

life

High MAS score: Low gender equality, competitiveness at work.

Low MAS score: High gender equality, strong work relationships.



Feminine Masculine

Intuition and consensus Decisive and aggressive

Resolution of conflicts by compromise and negotiation

Resolution of conflict by letting the strongest win

Rewards are based on equality Rewards are based on equity

Preference for smaller organizations Preference for larger organizations

People work in order to live People live in order to work

More leisure time is preferred over more money

More money is preferred over more leisure time

Careers are optional for both gendersCareers are compulsory for men, optional for women

There is a higher share of working women in professional jobs

There is a lower share of working women in professional jobs



Uncertainty Avoidance Index (UAI)

Degree to which society copes with anxiety by minimizing

uncertainty

High UAI score: Individuals attempt to avoid ambiguous situations. They

are governed by rules, order and collective truths.

Low UAI score: Individuals value differences and there are few rules.

People are encouraged to discover their own truth.



Long-Term Orientation Index (LTO)

Long-term horizon societies value perseverance of traditions andvalues

High LTO score: Value delivering on social obligations and avoiding loss

of face.

Low LTO score: Value reciprocity and shorter-term exchanges.



http://geert-hofstede.com/


http://geert-hofstede.com/


Air Crash of Korean Airline




Fortune : “You share a fascinating story about culture and airline safety.”

Gladwell: “Korean Air had more plane crashes thanalmost any other airline in the world for a period at theend of the 1990s. When we think of airline crashes, wethink, Oh, they must have had old planes. They musthave had badly trained pilots. No. What they werestruggling with was a cultural legacy, that Koreanculture is hierarchical. You are obliged to be deferentialtoward your elders and superiors in a way that would beunimaginable in the U.S.But Boeing and Airbus design modern, complexairplanes to be flown by two equals. That worksbeautifully in low-power-distance cultures [like theU.S., where hierarchies aren't as relevant]. But incultures that have high power distance, it's verydifficult.”



Low power-distance countries, for example, showed an underplaying of power--

where those in power would attempt to downplay their power. Think Silicon Valley,

where many powerful venture capitalists can be seen at an average Starbucks wearing

faded jeans and a t-shirt.

Cultures with high power-distance expect more deference in judgment to those in

power. Applied to the airplane cockpit, Gladwell used the power-distance theory to

explain why Korean culture contributed to the crashes of Korean Air jets. In high

power-distance cultures, it's not as common for a first officer to speak out against a

captain's actions in the cockpit.

As one former Korean Air pilot puts it, the sensibility in many of the airline's cockpits

was that "the captain is in charge and does what he wants, when he likes, how he

likes, and everyone else sits quietly and does nothing."


“At a dinner table, a lower-ranking person must wait until a higher-ranking person sits

down and starts eating, while the reverse does not hold true; one does not smoke in the

presence of a social superior; when drinking with a social superior, the subordinate

hides his glass and turns away from the superior;... in greeting a social superior

(though not an inferior) a Korean must bow; a Korean must rise when an obvious

social superior appears on the scene, and he cannot pass in front of an obvious social

superior. All social behavior and actions are conducted in the order of seniority or

ranking...”

-Korean linguist Ho-min Sohn


"Captain hit First Officer with the

back of his hand for making the error."


United States PDI: 40

Israel PDI: 13

Malaysia PDI: 104


KAL flight 801: It begins with the captain complaining of exhaustion.

CAPTAIN: If this round-trip is more than a nine-hour trip, we might get a littlesomething. With eight hours, we get nothing. Eight hours do not help us at all....They make us work to maximum, up to maximum. Probably this way... hotelexpenses will be saved for cabin crews, and maximize the flight hours. Anyway, theymake us... work to maximum.CAPTAIN: Eh... really... sleepy, [unintelligible words]FIRST OFFICER: Of course. FIRST OFFICER: Don't you think it rains more? In this area, here? [First Hint]FIRST OFFICER: Captain, the weather radar has helped us a lot… [Second Hint]CAPTAIN: They are very useful [missed the hints]FIRST OFFICER: Let's make a missed approach.CAPTAIN: Go around.


Fons Trompenaars’ Cultural Dimension


Cross-Cultural Collaboration

Car accident dilemma

A. My friend has a definite right as afriend to expect me to testify to thelower figure.

B. He has some right as a friend toexpect me to testify to the lowerfigure.

C. He has no right as a friend to expectme to testify to the lower figure.


Trompenaars’ Cultural Dimension

1. Universalism versus Particularism

2. Individualism versus Communitarianism

3. Neutral versus Affective

4. Specific versus Diffuse

5. Achievement versus Ascription

6. Sequential versus Synchronic

7. Internal versus External Control


Universalism versus Particularism

How people judge the behaviours of their colleagues.

Universalism: Society accepts an unequal distribution of power and people

understand "their place" in the system.

People place a high importance on laws, rules, values, and obligations. They try

to deal fairly with people based on these rules, but rules come before

relationships.

Particularism: People believe that each circumstance, and each relationship,

dictates the rules that they live by. Their response to a situation may change,

based on what's happening in the moment, and who's involved.



32

37

44

47

54

64

68

69

73

83

87

90

91

91

92

92

93

93

97

0 20 40 60 80 100

Venezuela

Korea

Russia

China

India

Mexico

Japan

Singapore

France

Estonia

Germany

Netherlands

Finland

United Kingdom

Norway

Sweden

USA

Canada

Switzerland




Individualism versus Communitarianism

Similar to the ‘Individualism and Collectivism’ presented by Hofstede.

Individualism: People believe in personal freedom and achievement. They believe

that you make your own decisions, and that you must take care of yourself.

Communitarianism: People believe that the group is more important than the

individual. The group provides help and safety, in exchange for loyalty. The group

always comes before the individual.


Individualism versus Communitarianism

We seek individual happiness



Neutral versus Affective

Neural: People make a great effort to control their emotions. Reason influences

their actions far more than their feelings. People don't reveal what they're thinking

or how they're feeling.

Affective: People want to find ways to express their emotions, even

spontaneously, at work. In these cultures, it's welcome and accepted to show

emotion.


Neutral versus Affective

We are in control / express of our feelings


Specific versus Diffuse

Specific: People keep work and personal lives separate. As a result, they believe

that relationships don't have much of an impact on work objectives, and, although

good relationships are important, they believe that people can work together

without having a good relationship.

Diffuse: People see an overlap between their work and personal life. They believe

that good relationships are vital to meeting business objectives, and that their

relationships with others will be the same, whether they are at work or meeting

socially. People spend time outside work hours with colleagues and clients.



Specific versus Diffuse



Achievement versus Ascription

Achievement: People believe that you are what you do, and they base your

worth accordingly. These cultures value performance, no matter who you are.

Ascription: People believe that you should be valued for who you are. Power,

title, and position matter in these cultures, and these roles define behavior.


Achievement versus Ascription


Sequential versus Synchronic

Sequential: People like events to happen in order. They place a high value on

punctuality, planning (and sticking to your plans), and staying on schedule. In this

culture, "time is money," and people don't appreciate it when their schedule is

thrown off.

Synchronic: People see the past, present, and future as interwoven periods. They

often work on several projects at once, and view plans and commitments as

flexible.



Sequential versus Synchronic



Internal versus External Control

Internal: People believe that they can control nature or their environment to

achieve goals. This includes how they work with teams and within organizations.

External: People believe that nature, or their environment, controls them; they must

work with their environment to achieve goals. At work or in relationships, they focus

their actions on others, and they avoid conflict where possible. People often need

reassurance that they're doing a good job.


Internal versus External Control


https://play.google.com/store/apps/details?id=zoomtouch.culturecompass.com&hl=en

Tools

https://itunes.apple.com/us/app/culturegps-lite/id297051765?mt=8

https://play.google.com/store/apps/details?id=zoomtouch.culturecompass.com&hl=en

https://itunes.apple.com/us/app/culturegps-lite/id297051765?mt=8


High Context CultureIn a high-context culture, there are many contextual elements that help people to

understand the rules… much is taken for granted. This can be very confusing for

person who does not understand the 'unwritten rules’.

Low Context CultureIn a low-context culture, very little is taken for granted… more explanation is

needed. There is less chance of misunderstanding particularly when visitors are

present.

ExampleFrench contracts tend to be short, much contextual information is available and

assumed within the high-context French culture. Low-context American culture

produces longer contracts in order to explain every detail/contingency.

Culture Context

Adapted from Hall, Hidden Differences: Studies in International Communication, 1985


Adapted from Hall, Hidden Differences: Studies in International Communication, 1985

Culture Context


How do High Context Cultures view Americans vs. How Americans

view Themselves?

•Undisciplined vs. Informal

•Too Familiar vs. Friendly

•Blunt and Rude vs. Direct

•Obsessed with Time vs. Efficient

•Interested in Dollars over People vs. Profit-oriented

•Driven vs. Dynamic

Culture Context


Culture Context

https://hbr.org/web/assessment/2014/08/whats-your-cultural-profile

The Culture Map (Public Affairs, 2014) by Erin Meyer

https://hbr.org/web/assessment/2014/08/whats-your-cultural-profile


Lego Experiment


Lego Experiment


Imp

ac

t

Time

RecognizeIncrease

Awareness

RespectAppreciate

Cultural

Differences

ReconcileResolve

Cultural

Differences

Realize and

RootImplement

Reconciling

Actions

Lego Experiment


4-step framework for effective cross-cultural management

Learn the definition and different types of culture – the cultural differences existacross countries, but are also influenced by a diversity of age, gender, regions,religions and many other types of social groups. Consider the dimensions presentedin this chapter as a starting point to build your own cross-cultural knowledge.

Understand the cultural differences – use the cultural dimensions to know whatdifferences to expect between people from different cultures. Employ a teambuilding exercise to identify how your team and colleagues view these differences.

Respect the cultural differences – keep the differences in mind when confrontedwith opposite views of the world. You must accept them and show respect for thedifferent standpoints.

Vive la différence – Enjoy the richness of a multi-cultural team. Remember thatyou can build on the differences to identify and mitigate risks, to find alternativeapproaches and achieve the project objectives in better ways, and to increase thelevel of innovation and quality of your project deliverables.

Cross-cultural strategy

1

2

3

4





“There is no room for compromise on ethics. ”

“Creating standardized processes allows you to outperform the competition.”

“Almond should focus, as we have, on gaining target customers, such as large

international firms, that share its values, and not go after companies that insist on

bribes and commissions.”

“Almond needs to lead the way by setting the standards for safety and ethics. A

company may achieve short-term success if it bows to hidden rules, but in the long

term it will eventually fail. The business environment in China is very different from

what it was 30 years ago, and it will continue to evolve. ”

“We have succeeded in large part because we implemented processes that have long

been used in Europe and the United States but are still relatively uncommon in

China.”



“The kind of misunderstanding and mistrust that have erupted inthe Chongqing venture can be avoided by establishing reasonableexpectations of future investment and return early on.”

“Liu fills an important role as the president of Almond China. His position requires him to serve as

a liaison and interpreter for the two sides. ”

“Both the Chinese and the foreign managers need to be more open-minded about the other side’s

perspective. ”

“Ethical issues should be treated the same way. In China, because there are no explicit laws

regarding bribery, foreign companies typically have three choices: They can do what domestic

companies do; they can strictly adhere to Western rules; or they can navigate the gray areas by

offering a variation of the typical kickback. ”

“Liu can advise the Germans to build up personal trust with the Chinese before talking about the

reasons for the standards. In order to establish a functional relationship, each party needs to

communicate in a way that makes the other feel respected and comfortable. ”

© Jiayu Chen, Ph.D. 72Thank You!

Documents

GE2250 Understand Global Project for Business and ...2250+Lecture+2+2015... · GE2250 Understand Global Project for Business and Engineering Professionals ... Pros: • Cost competition